Study explores women in crowdfunding
Study explores women in crowdfunding
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It’s tempting to think that crowdfunding is a wonderfully rational and meritocratic endeavour. Gone are the days where your contacts mattered as much as your product. With the crowd, you go direct to your audience and live and die based upon the quality of your offering.
Except it isn’t quite like that. For instance, a study from earlier this year highlighted how the start you get with your funding significantly impacts the total money you raise. When researchers gave a campaign a kick start (excuse the pun), they secured much more cash than those who had started from scratch.
Surely crowdfunding is gender neutral though? A study from Hebrew University of Jerusalem suggests that it may well work in leveling the playing field for female entrepreneurs.
The researchers explored the efforts of over 13,500 entrepreneurs on Kickstarter, who had secured backing from nearly 900,000 investors to the tune of over $120 million over a 3 year period. The results paint a fascinating picture of activity on the site.
It emerged that approximately 35% of all entrepreneurs on Kickstarter were female, whilst an impressive 44% of all investors were women. What’s more, there were also some fascinating gender differences in the projects themselves.
It transpired that women would generally seek lower levels of capital for their projects, and subsequently raise less than their male counterparts. However, women were shown to be more likely to succeed with funding their ventures. The data showed that women would score success around 70% of the time, versus 61% for male entrepreneurs. What’s more, analysis suggests that it wasn’t the lower funding target that was responsible for this.
It was also interesting to note the gender parity of support. The data revealed that female entrepreneurs would receive financial support primarily from other women. It emerged that male investors would only back 23% of the projects that had female project leads.
The researchers wanted to test whether this finding could be explained by women launching projects that simply didn’t appeal to men so much, such as in areas like fashion or dance. They conducted a survey of Kickstarter investors and found there was a direct link between the investors views on gender equality and their propensity to back female led projects.
The study concludes that for women to gain access to funding, especially in traditionally male dominated fields, will probably require greater access to female investors.
“These findings indicate that the increasing prevalence of crowdfunding platforms may lead to increased participation of women as investors, and to an increase in the flow of capital to projects led by women. In order to further this trend it is important to encourage women to pursue opportunities is less traditional, male-dominated fields such as games, which may offer more growth opportunities than more traditional fields; and at the same time to work to change perceptions in the general population regarding gender equality, as those perceptions play a role in investment decisions,” they state.
And this is important. I wrote earlier this year about a study looking at gender discrimination in venture funding. It emerged that the investors were significantly more likely to choose male entrepreneurs over their female peers, even if the content of the pitch was practically identical. And that wasn’t all. It also emerged that the prettier the entrepreneur, the more persuasive they were found to be. Providing they were male that is. Women could be as pretty, or as ugly, as they wanted, it made no difference.
So anything that levels the playing field has to be a good thing, for entrepreneurs and investors alike.Original post
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